SmartFinancial : Fourth Quarter 2021 Earnings Call

Exhibit 99.1

4Q 2021

SmartFinancial Announces Results for the Fourth Quarter 2021

Highlights for the Fourth Quarter of 2021

• Operating earnings1 of $0.52 and $2.39 per diluted common share for the 2021 fourth quarter and year end, respectively
• 31% increase in year-over-year operating earnings1 per diluted common share
• Net organic loan growth of over $75 million, a 12% annualized quarter-over-quarter increase
• Tangible book value per share1 of $19.26, a 4.8% annualized quarter-over-quarter increase
• Strategic Nashville, TN MSA2 enhancement with several senior relationship manager hires
• Gulf Coast Wealth Management team lift-out previously responsible for managing ~$350 million in AUM2
• Completion of Sevier County Bancshares, Inc. ("SCB") integration; five branch closures with near full realization of operational efficiencies
• Opening of Mobile, AL branch office and application approval of Auburn, Dothan and Montgomery branch offices
• Opening of Birmingham, AL loan production office

KNOXVILLE, TN - January 24, 2022 - SmartFinancial, Inc. ("SmartFinancial" or the "Company"; NASDAQ: SMBK), today announced net income of $6.7 million, or $0.40 per diluted common share, for the fourth quarter of 2021, compared to net income of $9.0 million, or $0.59 per diluted common share, for the fourth quarter of 2020, and compared to prior quarter net income of $9.6 million, or $0.61 per diluted common share. Operating earnings (Non-GAAP), which excludes securities gains, merger related and restructuring expenses and non-operating items, totaled $8.7 million, or $0.52 per diluted common share, in the fourth quarter of 2021, compared to $9.2 million, or $0.61 per diluted common share, in the fourth quarter of 2020, and compared to $9.9 million, or $0.63 per diluted common share, in the third quarter of 2021.

Billy Carroll, President & CEO, stated: "SmartFinancial reported another solid quarter as we wrapped up an outstanding year for our company. Loans and deposits continued to organically grow at a strong pace. We also expanded our sales team again this quarter with experienced and seasoned industry professionals. The investments we made in 2021 are positioning us very well as we look into 2022 and beyond."

SmartFinancial's Chairman, Miller Welborn, concluded: "We couldn't be more excited about where we are as a company. Our 2021 was a fantastic year on many fronts and it's nice to finish with strong numbers and incredible momentum. Our team is poised and ready for 2022".

Net Interest Income and Net Interest Margin

Net interest income was $29.9 million for the fourth quarter of 2021, compared to $30.4 million for the prior quarter. Average earning assets totaled $4.08 billion, an increase of $469.4 million. The growth in average earnings assets was primarily driven by an increase in average securities of $167.7 million, average interest-earning cash of $163.2 million and average loans and leases of $137.3 million. Average interest-bearing liabilities increased $354.3 million, related to continued core deposit growth.

The tax equivalent net interest margin was 2.92% for the fourth quarter of 2021, compared to 3.35% for the prior quarter. The tax equivalent net interest margin was impacted by a 47 basis point decrease in the average yield on interest-earning assets and offset by a 5 basis point decline in the rate on interest-bearing liabilities over the prior quarter. The decrease in yield on interest-earning assets was due to the combined impact of a quarter-over-quarter loan discount accretion and Payroll Protection Program ("PPP") fee accretion decrease of $2.5 million and increased interest-earning cash position.

1. Non-GAAP
2. Metropolitan Statistical Area ("MSA"); Assets Under Management ("AUM")

The yield on interest-bearing liabilities decreased to 0.39% for the fourth quarter of 2021 compared to 0.44% for the prior quarter. The cost of average interest-bearing deposits was 0.29% for the fourth quarter of 2021 compared to 0.34% for the prior quarter, a decrease of 5 basis points. The lower cost of average deposits was attributable to the maturing and repricing of time deposits, which decreased 13 basis points during the period. The cost of total deposits for the fourth quarter of 2021 was 0.22% compared to 0.25% in the prior quarter.

The following table presents selected interest rates and yields for the periods indicated:
		Three Months Ended
		Dec	Sep	Increase
Selected Interest Rates and Yields		2021		2021		(Decrease)
Yield on loans and leases	4.53 %	4.95 %	(0.42)%
Yield on earning assets, FTE	3.20 %	3.67 %	(0.47)%
Cost of interest-bearing deposits	0.29 %	0.34 %	(0.05)%
Cost of total deposits	0.22 %	0.25 %	(0.03)%
Cost of interest-bearing liabilities	0.39 %	0.44 %	(0.05)%
Net interest margin, FTE	2.92 %	3.35 %	(0.43)%

Provision for Loan and Lease Losses and Credit Quality

At December 31, 2021, the allowance for loan and lease losses was $19.4 million. The allowance for loan and lease losses to total loans and leases was 0.72% as of December 31, 2021, compared to 0.73% as of September 30, 2021. For the Company's originated loans and leases, the allowance for loan and lease losses to originated loans and leases, less PPP loans, was 0.74% as of December 31, 2021, compared to 0.76% as of September 30, 2021. The remaining discounts on the acquired loan and lease portfolio totaled $15.5 million, or 3.42% of acquired loans and leases as of December 31, 2021.

The following table presents detailed information related to the provision for loan and lease losses for the periods indicated (dollars in thousands):

				Three MonthsEnded
						Dec		Sep
	Provision for Loan and Lease Losses Rollforward					2021				2021			Change
	Beginning balance	$	19,295			$	18,310		$	985
	Charge-offs		(499)				(239)		(260)
	Recoveries		134				75			59
	Net charge-offs				(365)				(164)			(201)
	Provision		422				1,149			727
	Ending balance	$			19,352			$	19,295		$	57
	Allowance for loan losses to total loans and leases, gross		0.72	%		0.73 %		(0.01)%

The Company is not required to implement the provisions of the Current Expected Credit Losses ("CECL") accounting standard until January 1, 2023 and is continuing to account for the allowance for loan and lease losses under the incurred loss model.

Nonperforming loans and leases as a percentage of total loans and leases was 0.12% as of December 31, 2021, a decrease of 1 basis point from the 0.13% reported in the third quarter of 2021. Total nonperforming assets (which include nonaccrual loans and leases, loans and leases past due 90 days or more and still accruing, other real estate owned and other repossessed assets) as a percentage of total assets was 0.11% as of December 31, 2021, as compared to 0.14% as of September 30, 2021.

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The following table presents detailed information related to credit quality for the periods indicated (dollars in thousands):

						Three MonthsEnded
								Dec			Sep						Increase
	Credit Quality		2021				2021					(Decrease)
	Nonaccrual loans and leases				$			3,124			$	3,567			$		(443)
	Loans and leases past due 90 days or more and still accruing							64				-						64
	Total nonperforming loans and leases							3,188				3,567					(379)
	Other real estate owned							1,780				2,415					(635)
	Other repossessed assets							90				77					13
	Total nonperforming assets				$			5,058			$		6,059			$				(1,001)
	Nonperforming loans and leases to total loans and leases, gross				0.12	%		0.13 %		(0.01)%
	Nonperforming assets to total assets							0.11		%		0.14 %			(0.03)%

Noninterest Income

Noninterest income increased $497 thousand to $6.8 million for the fourth quarter of 2021 compared to $6.3 million for the prior quarter. During the fourth quarter of 2021, the primary components of the changes in noninterest income were as follows:

• Increase in service charges on deposit accounts, related to the SCB acquisition, account growth and transaction volume;
• Increase in investment income, related to increased volume;
• Decrease in insurance commissions, due to lower transaction volume, primarily driven by seasonality;
• Increased interchange and debit card transaction fees, related to higher volume, account growth and the SCB acquisition; and
• Increase in other, primarily from the gain on sale of credit card portfolio.

The following table presents detailed information related to noninterest income for the periods indicated (dollars in thousands):

			Three MonthsEnded					Increase
				Dec		Sep
Noninterest Income			2021			2021			(Decrease)
Service charges on deposit accounts		$	1,372		$	1,220	$	152
Gain (loss) on sale of securities, net		-			45			(45)
Mortgage banking income		803			994			(191)
Investment services		621			448			173
Insurance commissions		517			745			(228)
Interchange and debit card transaction fees		1,445			1,078			367
Other		2,048			1,779			269
Total noninterest income	$	6,806		$	6,309		$			497

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Noninterest Expense

Noninterest expense increased $4.5 million to $27.8 million for the fourth quarter of 2021 compared to $23.3 million for the prior quarter. During the fourth quarter of 2021, the primary components of the changes in noninterest expense were as follows:

• Increase in salaries and employee benefits, primarily due to: o Additional personnel related to the SCB acquisition;
  o Banking team hires in Auburn, Dothan, Montgomery and Birmingham, AL, Tallahassee, FL and Nashville, TN; o The Gulf Coast Wealth Management team lift-out;
• Increase in occupancy and equipment expense from the SCB acquisition and expansion in Alabama; and
• Increase in other expense, primarily related to overall franchise growth.

The following table presents detailed information related to noninterest expense for the periods indicated (dollars in thousands):

			Three MonthsEnded				Increase
				Dec		Sep
Noninterest Expense			2021			2021			(Decrease)
Salaries and employee benefits		$	14,990		$	13,594	$	1,396
Occupancy and equipment		3,026			2,536			490
FDIC insurance		567			525			42
Other real estate and loan related expenses		583			407			176
Advertising and marketing		176			235			(59)
Data processing and technology		1,722			1,753			(31)
Professional services		847			810			37
Amortization of intangibles		660			711			(51)
Merger related and restructuring expenses		2,762			464			2,298
Other		2,490			2,274			216
Total noninterest expense	$	27,823		$	23,309		$	4,514

Income Tax Expense

Income tax expense was $1.8 million for the fourth quarter of 2021, a decrease of $872 thousand, compared to $2.6 million for the prior quarter.

The effective tax rate was 20.9% for the fourth quarter of 2021 and 21.5% for the prior quarter.

Balance Sheet Trends

Total assets at December 31, 2021 were $4.61 billion compared with $3.30 billion at December 31, 2020. The increase of $1.31 billion is primarily attributable to increases in cash and cash equivalents of $563.4 million, securities of $343.8 million, loans and leases of $311.2 million, bank owned life insurance of $48.4 million and goodwill and intangibles of $19.4 million related to the SCB acquisition and the acquisition of Fountain Equipment Finance, LLC.

Total liabilities increased to $4.18 billion at December 31, 2021 from $2.95 billion at December 31, 2020. The increase of $1.23 billion was primarily from organic deposit growth of $809.8 million and deposits of $407.0 million from the SCB acquisition.

Shareholders' equity at December 31, 2021 totaled $429.4 million, an increase of $72.3 million, from December 31, 2020. The increase in shareholders' equity was primarily from the issuance of $42.3 million of common stock for the acquisition of SCB and net income of $34.8 million for the twelve months ended December 31, 2021, which was offset by repurchase of the Company's common stock of $1.2 million and $3.7 million of dividends paid. Tangible book value per share (Non-GAAP) was $19.26 at December 31, 2021, compared to $17.92 at December 31, 2020. Tangible common equity (Non-GAAP) as a percentage of tangible assets (Non-GAAP) was 7.18% at December 31, 2021, compared with 8.41% at December 31, 2020.

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The following table presents selected balance sheet information for the periods indicated (dollars in thousands):

		Dec		Dec			Increase
Selected Balance Sheet Information		2021		2020		(Decrease)
Total assets		$ 4,611,579		$	3,304,949		$	1,306,630
Total liabilities	4,182,149			2,947,781			1,234,368
Total equity	429,430			357,168		72,262
Securities	559,422			215,634		343,788
Loans and leases	2,693,397			2,382,243		311,154
Deposits	4,021,938			2,805,215		1,216,723
Borrowings	87,585			81,199		6,386

Conference Call Information

SmartFinancial issued this earnings release for the fourth quarter of 2021 on Monday, January 24, 2022, and will host a conference call on Tuesday, January 25, 2022, at 10:00 a.m. ET. To access this interactive teleconference, dial [phone] for United States or +1

1. 526-1599for other locations and enter the access code, 574606. A replay of the conference call will be available through March 26, 2022, by dialing [phone] for United States or [phone] and entering the access code, 247688. Conference call materials will be published on the Company's webpage located at http://www.smartfinancialinc.com/CorporateProfile, at 9:00 am ET prior to the conference call.

About SmartFinancial, Inc.

SmartFinancial, Inc., based in Knoxville, Tennessee, is the bank holding company for SmartBank. SmartBank is a full-service commercial bank founded in 2007, with branches across Tennessee, Alabama, and the Florida Panhandle. Recruiting the best people, delivering exceptional client service, strategic branching, and a disciplined approach to lending have contributed to SmartBank's success. More information about SmartFinancial can be found on its website: www.smartfinancialinc.com.

Source

SmartFinancial, Inc.

Investor ContactsBilly Carroll President & CEO

[phone] [e-mail]

Ron Gorczynski

Executive Vice President, Chief Financial Officer [phone] [e-mail]

Media Contact

Kelley Fowler

Senior Vice President, Public Relations & Marketing [phone] [e-mail]

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